“This is a very odd year for us as we all find ourselves in the middle of this worldwide pandemic, and because of the unanticipated COVID-19 effect and the related economic impact, we’re experiencing a reduction of revenue for [FY 2019-20]," Hauck said during the workshop. “This is even more unusual than normal economic times because we’ve not seen anything like this before. We’ve seen swine flus; we’ve seen hurricanes; we’ve seen floods, oil, economic downturns, recessions; but this is just different and unique. So it really is unprecedented.”
FY 2020-21 begins Oct. 1, and the city is proposing general fund revenue will increase 1%-2% from what is anticipated for the end of FY 2019-20, albeit a decrease of about $1 million from the FY 2019-20 base budget, according to workshop information.
“Once we take this year’s hit, basically, which takes us through September, that—by the time we get 12 months down the road, we believe there will be a slight increase," Hauck said.
After respective year-over-year drops of 9.25% and 24.56% in March and April sales tax collections—a major source of revenue for the city—Tomball saw sales tax collections for May increase by 0.14% year over year, according to data from the Texas Comptroller of Public Accounts, as Community Impact Newspaper previously reported.
Hauck said in an interview he was optimistic May's allocations would reflect better conditions than the previous month's. However, as reopening is put on pause in Texas, Hauck said it is possible that the city will see an effect as portions of the economy are required to close again.
"[These] are sales tax trends that are more volatile than I have ever seen in my time as a city manager," he said. "That just means we, by design and for good reason, are micromanaging our budget like we have never had to in my time."
While Hauck assured Tomball City Council members July 6 that the $54.63 million budget for FY 2019-20 continues to allow the same quality service the community has come to expect and healthy fiscal reserves, general fund expenditures in FY 2020-21 are budgeted for approximately $300,000 less than the previous year. Still, the city's property tax rate remains steady at $0.341455 per $100 valuation.
The draft budget draws the balance of the city's total reserves from $56.78 million to $48.34 million, but Hauck said the city has 53% of its annual operating expenses in general fund reserves, with a requirement of keeping only 25% in reserves.
“I would be remiss if I didn’t point out just how thankful I am to our council [and] to our community for constantly choosing in a very thoughtful and calculated manner to have good, strong reserves for things like this that we never could have anticipated in our wildest dreams. You have cities all across America that have reserves that are in the single digits," he said.
A dip in reserves is largely attributed to a drawn down of the capital improvement projects fund, which funds major projects that are moving forward with design or construction, such as drainage and utilities projects in the southern part of the city and alleyway improvement projects in Old Town Tomball, Hauck said.
Cuts in department budgets include a 4.2% reduction to public works, a 3% reduction to the fire department and an 18% reduction in information technology resulting from last year's significant investment in upgraded technology, a one-time cost, Hauck said.
The budget also includes funds for three additional school resource officers contracted with Tomball ISD, with TISD supporting 70% of the associated costs, he said. With TISD's payments factored in, the Tomball Police Department's proposed budget is also lower in FY 2020-21 than in FY 2019-20, Hauck said.
The training budgets for police and fire were reduced by 25% across the board, Hauck said. However, department chiefs said the decreased funding does not leave staff without proper training.
Fire Chief Randy Parr said travel and out-of-town seminars were primarily what was cut, both of which are more beneficial for networking than for training.
"We do have the ability to train our firefighters appropriately, and that's all we really need to do," he said.
Council Member Derek Townsend said he would like to see the city's final budget allot more funds for training police and fire personnel.
"I would like to see us put money in. I think we need to have our police department with enough gear that if things go south here in Tomball, Texas—that we have the gear, supplies and necessary training that we can take care of business without having to go, ‘We should have had that stuff,'" he said during the workshop.
Police Chief Jeffrey Bert, who began serving as chief in June, said the police department understands the need to make cuts during difficult economic times for the city.
“With regard to training, ... I can clearly say, just from an emotional side of the house, this is not a police department that believes they are victims of being defunded," Bert said during the workshop. "They are grateful, they are gracious and they understand the tough times that are ahead and that they’re in.”
Furthermore, the draft budget recommends a 2% salary increase for city employees, Hauck said, to retain employees and reduce the catch-up in future years. A 2% pay increase would cost the city about $250,000 from its general fund, he said.
“In making this recommendation, I weighed the importance of retaining and recruiting great employees with the message that could be sent to the public, many of which have been affected by the economic impacts of the COVID-19 pandemic. This is why I felt it important to propose no more than a modest 2% increase with no additional funding for salary survey adjustments at all," Hauck said during the workshop.
However, Townsend said he would like to offer employees a 3% salary increase. The additional 1% increase would cost the city about $126,000 more, Hauck said.
"What’s 1%? Not much, but it might be the difference between being able to make a bill and not being able to make a bill for one of our employees," Townsend said.
Council was divided on the salary increase during the July 6 workshop, as Council Member John Ford noted that the city's largest employer—HCA Houston Healthcare Tomball—deferred all pay increases this year. Council Member Chad Degges said the salary increases could be unsustainable should the economy not bounce back as soon as the city is anticipating.
"If we’re going to give increases and we kind of burn down and things go worse than planned, when we sit here next [year], we’re going to have a bigger issue," he said. "If we’re down to a 2017 budget in income, then I’m going to go back to 2017 and look at headcount. ... We have to be careful about increases with the uncertainty.”
A second budget workshop is tentatively slated for Monday, July 20, with public hearings scheduled Aug. 17 and Sept. 7, before council members vote to adopt the budget Sept. 21, according to workshop information.